Instructions for Form NYC-204deducted in computing federal taxable income. Where the related member is a New York City taxpayer, the related member(s) must subtract from ENI those

GENERAL INFORMATION

PARTNERSHIP DEFINEDFor purposes of this form, “partnerships” include syndicates, groups, pools, joint ventures and limited liability companies and other unincorporated or incorporated organizations classified as partnerships for federal income tax purposes, through or by means of which any business, profession, financial operation or venture is carried on. An estate or trust is not a partnership. WHO MUST FILE1. Any partnership that carries on or liquidates any

trade, business, profession or occupation wholly or partly within New York City and has a total gross income from all business regardless of where carried on of more than $25,000 (prior to any deduction for cost of goods sold or services performed) must file an Unincorporated Business Tax Return on Form NYC-204.

2. In addition, every partnership that has unincorporated business gross income of $25,000 or less, but has uni ncorporated business taxable income of more than $15,000 must file a return for each taxable year in which it carries on business in the City to anyextent. Unincorporated business taxable income isthe excess of unincorporated business gross income over the aggregate of unincorporated business deductions, allocated to New York City, less the allowance for partners’ services and unincorporated business exemptions.

Taxpayers that are required to file an Unincorporated Business Tax Return but have no tax liability may be eligible to file a Form NYC- 204 EZ. To determine whether you may use Form NYC-204 EZ refer to that form. The Form NYC-204 EZ may also be used by a partnership thatis not required to file but wishes to disclaim

any liability for tax because it is engaged solely in activities that are exempt from the tax.

WHO IS SUBJECT TO THE TAX1) The Unincorporated Business Tax is imposed

on any individual or unincorporated entity (including a partnership, fiduciary or corporation in liquidation) engaged in any trade, business, profession, or occupation wholly or partly carried on within New York City.

2) Income received from the practice of law, medicine, dentistry, architecture, or any other profession is subject to the unincorporated business tax.

3) S corporations are not subject to the Unincorporated Business Tax. S Corporations are subject to the General Corporation Tax.

4) The Unincorporated Business Tax does not apply to: a) any entity subject to the tax imposed

by Title 11, Chapter 6 (General Corporation Tax) of the NYC Administrative Code. For taxable years beginning in 1996 and there- after, unincorporated associations and publicly-traded partnerships taxable ascorporations for federal income tax purposes under IRC §7701(a) (3) and §7704 are subject to the General Corporation Tax and not the Unincorporated Business Tax. However, unincorporated entities that were subject to the Unincorporated Business Tax for tax years beginning in 1995 that elected to continue to be subject to the Unincorporated Business Tax for years after 1995 on a timely filed Unincorporated Business

Tax return for tax year beginning in 1996 continue to be subject to the Unincorporated Business Tax.

b) any entity subject to the tax imposed by Title 11, Chapter 11 (Utility Tax) ofthe NYC Administrative Code (except that vendors of utility services are subject to the unincorporated business tax on that percentage of their entire net income allocable to the City which their non-utility receipts bear to their total receipts);

c) any entity carrying on an insurance business as a member of the New YorkInsurance Exchange (authorized in Section 6201 of the Insurance Law); or

d) Real Estate Mortgage Investment Conduit (REMICs). Holders of inter-ests in a REMIC remain taxable on such interests or on the income from such interests.

e) Wireless Telecommunications ServiceProviders

Effective for tax periods beginning on and after August 1, 2002, entities that receive eighty percent or more of their gross receipts from charges for providing mobile telecommunications services to customers will be taxed as if they were regulated utilities for purposes of the New York City Utility Tax and Unincorporated Business Tax. Thus, such entities will be subject to only the New York City Utility Tax. The amountof gross income subject to tax has been amended to conform to the Federal Mobile Telecommunications Sourcing

Instructions for Form NYC-204Partnership Return 2006

F I N A N C ENEW YORK

For films and shows completed on or after January 1, 2005, eligible taxpayers are allowed a Made in NYC Film Production Credit equal to 5% of the qualified production costs paid orincurred in the production of qualified films and television shows. Use Form NYC-114.9 to claim the credit against the Unincorporated Business Tax.For tax years beginning on or after January 1, 2005, taxpayers must allocate unincorporated business taxable income using formula allocation. However, eligible taxpayers that have usedbooks and records allocation for the prior two tax years may elect to continue doing so for tax years beginning on or after January 1, 2005 and before January 1, 2012. See section 11-508(b) and (c) of the Administrative Code as amended by Ch. 633 of the Laws of 2005. For tax years beginning on or after January 1, 2005, rented tangible personal property will beincluded in the property allocation factor. See Administrative Code section 11-508(c)(1) as amended by Chapter 633 of the Laws of. 2005. For tax years beginning on and after July 1, 2005,the source of income from services will be determined by the place of performance instead of the office out of which the services were performed using a three-year phase-in schedule.Administrative Code section 11-508(c)(3) as amended by Chapter 633 of the Laws of. 2005. See instructions for Schedule C for more information. For tax years beginning on or after January 1, 2004, in determining unincorporated business entire net income of taxpayers, other than eligible farmers (for purposes of the New York Statefarmers’ school tax credit), the amount allowed as a deduction with respect to a sport utility vehicle that is not a passenger automobile for purposes of section 280F (d)(5) of the InternalRevenue Code is limited to the amount allowed under that section 280F as if the vehicle were a passenger automobile as defined in that section. See Administrative Code sections 11-506(g)and 11-507(21), (23) and (24), the instructions to Form NYC-399Z and Finance Memorandum 05-1-R dated September 22, 2005 “Application of IRC §280F Limits to Sport Utility Vehicles”.The Relocation Employment Assistance Program (REAP) has been reinstated and a program granting similar benefits to businesses that relocate to lower Manhattan (LMREAP) hasbeen enacted. Both the reinstatement of the REAP program and the enactment of the LMREAP program are effective as of July 1, 2003. See Administrative Code Administrative Codesections 11-503(i) and (l).Related members income and expense modifications—For tax years beginning on or after January 1, 2003, taxpayers may be required to add back to unincorporated business entire netincome ("ENI") certain payments for the use of intangible property, such as trademarks or patents, made during the tax year to related member(s) to the extent such payments werededucted in computing federal taxable income. Where the related member is a New York City taxpayer, the related member(s) must subtract from ENI those payments received duringthe tax year to the extent the payments were included in federal taxable income and were required to be added back to the ENI of a related taxpayer. See Chapter 686 of the Laws of 2003,Part M and Local Law 53 of 2003.Effective for tax periods beginning on and after August 1, 2002, entities that receive eighty percent or more of their gross receipts from charges for the provision of mobile telecommunica-tions services to customers will be taxed as if they were regulated utilities for purposes of the New York City Utility Tax, General Corporation Tax, Banking Corporation Tax andUnincorporated Business Tax. In addition, if any such entity is a partnership, its partners will not be subject to the New York City Utility Tax on their distributive share of the income ofany such entity. Finally, for tax years beginning on and after August 1, 2002, partners in any partnership subject to the Utility Tax as a “utility” as defined in Ad. Code section 11-1101(6)will not be subject to Unincorporated Business Tax on their distributive share of the income of any such entity. Chapter 93, Part C, of the Laws of 2002.Effective for tax years ending after September 10, 2001, for purposes of the New York City Unincorporated Business Tax, General Corporation Tax and Banking Corporation Tax, the Cityhas "decoupled" from the Federal bonus depreciation deductions allowed under the Job Creation and Worker Assistance Act of 2002 and the Jobs and Growth Tax Relief ReconciliationAct of 2003 except with respect to the depreciation deductions allowed with respect to "qualified New York liberty zone property", "qualified New York liberty zone leasehold improve-ments" and "qualified property" placed in service in the Resurgence Zone. See, Finance Memorandum 02-3 (revised) "New York City Tax Consequences of Certain Retroactive Federaland New York Tax Law Changes" and Form NYC-399Z for more information.

Highlights of Recent Tax Law Changes for Partnerships (including Limited Liability Companies)

For tax years beginning on or after January 1, 2006, qualifying taxpayers that relocate to an industrial business zone where they engage in industrial and manufacturing activities may beeligible for a one-time refundable credit equal to $1,000 for each full-time employee at eligible premises in the IBZ, with certain limits. Use Form 114.6 to claim the creditagainst the Unincorporated Business Tax.

Act of 2000. In addition, for tax years beginning on and after August 1, 2002, partners in any partnership subject to the Utility Tax as a “utility” as defined in Ad.Code section 11-1101(6) will not be subject to Unincorporated Business Tax on their distributive share of the income of any such entity.

5) Full Exemption for Investment Activities: A partnership, except a dealer as defined in Admin. Code §11-501(l), will not be deemed engaged in an unincorporated business solely by reason of the conduct of the following activ-ities for its own account: the purchasing, holding or selling of property (defined below), engaging in transactions in positions in property, the acquisition, holding or disposition, otherthan in the ordinary course of business, of interests in unincorporated entities also eligible for this exemption, and any other activity not constituting an unincorporated business subject to the Unincorporated Business Tax.

Property Defined . Property for this purpose includes real and personal property, including property qualifying as investment capital (see instructions for Schedule D of this form), and other stocks and securities, notional principal contracts, derivative financial instruments and other positions in property but excluding property and positions in property held by a dealer, and excluding debtinstruments acquired in the ordinary course of a trade or business and certain other property. See Admin. Code §11-502(c)(i)(A).

Notwithstanding anything to the contrary, the receipt of $25,000 or less of gross receiptsduring the taxable year (determined without regard to deductions) from an unincorporated business will not disqualify the taxpayer for this exemption.

Partial Exemption for Investment Activities: (Admin Code §11-502(c)(4)) For taxable years beginning after 1995, if a taxpayer is an unincorporated entity (not an individual) and is primarily engaged in

1. the activities described above under “Full Exemption for Investment Activities ”or

2. the ownership as an investor of interests in one or more other unincorporated entities engaged in an unincorporated business in the City.

The taxpayer’s own activities described at (1) and the activities of any other unincorporated entity primarily engaged in the activities described at (1) and (2) in which the taxpayer holds an interest will not be considered an unincorporated business carried on by the taxpayer and the income from those activities will not be subject to the tax.

A taxpayer will be considered to be primarily engaged in the activities described at (1) and (2) if at least 90 percent of the average monthly gross value of its total assets consists of:

a. property as defined above,

b. interests in unincorporated entitiesnot engaged in any unincorporatedbusiness in the City, and

c. interests held as an investor in entities engaged in an unincorporated business in the City.

For this purpose, real property and mar- ketable securities are valued at their fair market value and all other assets are valued according to the books and records of the taxpayer in accordance with generally accept- ed accounting principles (GAAP).

Investor Defined: For this purpose, a taxpayer will be considered to hold an interest in another entity as an investor if either :

(i) the entity would qualify as primarily engaged in the activities described at (1) and (2) above and the taxpayer’s share of each item of the entity’s income, gain, deduction, credit or loss is not materially different from the taxpayer’s share of any other such item, or

(ii) the taxpayer is neither a general partnernor managing or participating in theday-to-day business of the other entity.See Admin. Code §11-502 (c) (1) (B).

Use the worksheet provided at the end of theseinstructions to determine whether you are eligi-ble for the partial exemption. The partial exemp-tion is illustrated by the following examples:

Example 1:In 1996, Partnership A is engaged directly inthe purchase and sale of stocks and securitiesfor its own account in the City. Partnership Aalso is a limited partner in Partnership B,which is engaged in the purchase and sale ofsecurities for its own account in the City.Partnership A also is a non-managing mem-ber of Limited Liability Company C, which isa securities dealer in the City. LLC C is sub-ject to tax on all of its income. Partnership Bis wholly exempt from tax.

Partnership A is not eligible for the fullinvestment exemption. However, Partner-ship A qualifies as primarily engaged in activ-ities described at (1) and (2). Therefore, A isnot taxable on its own self-trading activity noron its share of B’s income from self-trading.A is taxable on its share of C’s income, gainsand losses, including any income, gains andlosses from C’s own self-trading activity.Partnership A is not treated as a dealer solelyby reason of its membership in LLC C.

Example 2:The facts are the same in example 1 exceptthat C is also a limited partner in PartnershipD, which is engaged solely in the purchaseand sale of securities for its own account in theCity. LLC C’s interest in Partnership D repre-sents less than 90 percent of C’s gross assets.Partnership D is exempt from tax because it issolely trading for its own account. C is taxableon its share of D’s self-trading income becauseC does not qualify as primarily engaged in theactivities described at (1) and (2). A is taxableon its share of C’s income including C’s shareof D’s self-trading income.

Example 3:The facts are the same as in example 2 exceptthat C’s interest in Partnership D represents95 percent of C’s gross assets. C qualifies as

primarily engaged in the activities describedat (1) and (2). Therefore C is not taxable onits share of D’s self-trading income. A is tax-able on its share of C’s income other than C’sshare of D’s self-trading income.

6) A partnership that is an owner, lessee or fiducia-ry will not be deemed engaged in an unincorpo-rated business solely by reason of the holding,leasing or managing of real property. For tax-able years beginning on or after July 1, 1994, if anindividual or unincorporated entity is carrying onan unincorporated business in whole or in part inthe City, and is also holding, leasing or manag-ing real property as an owner, lessee or fiduciary,the holding, leasing or managing of the propertywill not be considered an unincorporated busi-ness to the extent that the real property is heldfor the purposes of producing rental income orgain on the disposition of the real property, pro-vided, however, this partial exemption forrental real estate is not available to a dealerholding real property primarily for sale tocustomers in the ordinary course of thedealer’s trade or business. The operation byany taxpayer, otherwise eligible for the partialexemption, of a garage or other business at theproperty solely for the benefit of tenants in theproperty that is not open or available to the gen-eral public will be considered to be incidental tothe holding, leasing or managing of the propertyand will not be considered an unincorporatedbusiness. However, if such a taxpayer operates agarage or other business at the property thatalso is open or available to the general public,that garage or other business will be considereda taxable unincorporated business, provided,however, for taxable years beginning after 1995,if a taxpayer operates a garage that is open tobuilding tenants and the public, the operation ofthat garage will not be considered a taxable unin-corporated business but only to the extent ofincome from parking services provided at thatgarage to building tenants on a monthly orlonger-term basis and only if the informationrequired to be filed with this return speci-fied below is provided with respect to thatgarage. All other income from the operation ofthat garage will be subject to the tax.

The taxpayer must submit with this return astatement containing the following for eachgarage or other similar facility that is operat-ed for the benefit of building tenants and thatis open to the general public:1. the parking facility name;2. the parking facility address;3. the license number of the facility if appli-

cable;4. the licensed capacity of the facility if

licensed;5. the total number of transactions and

amount of receipts for the taxable yearfrom all sales of parking services includ-ing prepaid parking services, all parkingservices provided without charge and allparking services paid for by a personother than the person whose vehicle isparked, garaged or stored, such as amerchant validation of a parking ticket);

6. the total number of transactions andamount of receipts from sales of month-

Instructions for Form NYC-204 2006 Page 2

ly or longer term parking servicesincluding a designation of each transac-tion and receipt as exempt from the 8percent Manhattan parking tax, whereapplicable; and

7. the total number of transactions andamount of receipts from sales of month-ly or longer term parking services pro-vided to building tenants.

Failure to submit the above informationwith this return will result in all of theincome of that garage being subject totax. See Section 11-502 (d) of the NYCAdministrative Code.

NOTE: If you engage exclusively in an exemptunincorporated business activity but file forinformation purposes, use Form NYC-204EZ.

OTHER FORMS YOU MAY BE REQUIREDTO FILEFORM NYC-5UB - Partnership Declaration ofEstimated Unincorporated Business Tax must befiled by every partnership carrying on an unincor-porated business or profession in New York Cityand whose estimated tax can reasonably beexpected to exceed $1,800 for the tax year immedi-ately following the tax year covered by this return.

The declaration must cover a full calendar or fiscalyear and is due on the 15th day of the fourthmonth of the taxable year.

For further information about estimated taxpayments and due dates see Form NYC-5UB

FORM NYC-64 - Application for AutomaticExtension is an application for a six-month exten-sion of time to file an unincorporated business taxreturn for partnerships. File Form NYC-64 on orbefore the due date of the return.

FORM NYC-113 - Unincorporated Business TaxClaim for Credit or Refund is used to claim a cred-it or refund of Unincorporated Business Tax.

FORM NYC-115 - Unincorporated Business TaxReport of Change in Taxable Income made by theInternal Revenue Service and/or New York StateDepartment of Taxation and Finance must be usedfor reporting adjustments in taxable income result-ing from an Internal Revenue Service audit of yourfederal income tax return and/or a New YorkState Department of Taxation and Finance audit ofyour State income tax return.

FORM NYC-221 - Underpayment of EstimatedUnincorporated Business Tax will help you deter-mine if you have underpaid an estimated taxinstallment and, if so, compute the penalty due.

FORM NYC-399 - Schedule of New York CityDepreciation Adjustments must be used to com-pute the allowable New York City depreciationdeduction if you claim the federal ACRS orMACRS depreciation deduction for certain proper-ty placed in service after December 31, 1980. Seethe instructions for Form NYC-399 and for line 14dof Schedule B.

FORM NYC-399Z - Depreciation Adjustments forCertain Post 9/10/01 Property may have to be filedby taxpayers claiming depreciation deductions for

certain sport utility vehicles or "qualified property,"other than “qualified property” placed in service inthe Resurgence Zone, "qualified New York LibertyZone property" and "qualified New York LibertyZone leasehold improvements" placed in serviceafter September 10, 2001 for federal or New YorkState tax purposes. See “Highlights of Recent TaxLaw Changes”, Finance Memorandum 02-3(revised) "New York City Tax Consequences ofCertain Retroactive Federal and New York TaxLaw Changes" and Finance Memorandum 06-1dated October 12, 2006 “Application ofIRC§280F Limits to Sport Utility Vehicles”.

FORM NYC-CR-A - Commercial Rent Tax AnnualReturn must be filed by every tenant that rentspremises for business purposes in Manhattansouth of the center line of 96th Street and whoseannual or annualized rent for any premises is atleast $200,000. (Effective June 1, 2001).

FORM NYC-RPT - Real Property Transfer TaxReturn must be filed when the partnership acquiresor disposes of an interest in real property located inNew York City, including a leasehold interest; whenthere is a partial or complete liquidation of the part-nership that owns or leases real property; or whenthere is transfer of a controlling economic interestin a partnership that owns or leases real property.

WHEN TO FILEForm NYC-204 is due on or before April 16, 2007,or, for fiscal year taxpayers, on or before the 15thday of the fourth month following the close of thetaxable year.

If a partnership is terminated and completely liqui-dated during its normal taxable year, resulting inan accounting period of less than 12 months forfederal income tax purposes, the due date is the15th day of the fourth month following the end ofthe accounting period.

An automatic extension of six months for filingthis return will be allowed if, within the time pre-scribed for filing, the taxpayer files with theDepartment of Finance an Application forExtension on Form NYC-64 and pays the amountproperly estimated as its tax. See the instructionsfor Form NYC-64 for information regarding whatconstitutes a properly estimated tax for this pur-pose. Failure to pay a properly estimated amountwill result in a denial of the extension.

No additional extension for filing a return will begranted beyond the six-month extension, unlessthe taxpayer is outside the United States.(Taxpayers outside the United States should referto 19 RCNY Section 28-18(c)(3) for additionalextensions.)

WHERE TO FILEReturns with remittances:

NYC Department of FinanceP.O. Box 5040Kingston, NY 12402-5040

Returns claiming refunds:NYC Department of FinanceP.O. Box 5050Kingston, NY 12402-5050

All others:

NYC Department of FinanceP.O. Box 5060Kingston, NY 12402-5060

NOTE: If a Declaration of EstimatedUnincorporated Business Tax (Form NYC-5UB) isbeing filed, DO NOT mail it to any address listedhere. It should be mailed to the address indicatedon Form NYC-5UB.

ACCESSING NYC TAX FORMSBy Computer - Download forms from theFinance website at nyc.gov/finance

By Fax - For fax copies call 212-504-4038 fromthe phone connected to your fax machine ormodem.By Phone - Order forms through Finance’sform ordering service, by calling 212-504-4035,and receive forms in the mail.

BUSINESS CARRIED ON BOTH INSIDEAND OUTSIDE NEW YORK CITYIf business is carried on both inside and outside NewYork City, a fair and equitable portion of the busi-ness income shall be allocated to New York City.

If the unincorporated business does not carry onbusiness both inside and outside of New YorkCity, all of the business income shall be allocatedto New York City. (Refer to the instructions forSchedule E, Business Allocation Schedule.)

BUSINESS TERMINATED DURING TAX-ABLE YEARIf the partnership was terminated during 2006,attach a statement to Form NYC-204 showing dis-position of the business property and how it wasreported on the return. Check the box on page 1of this return.

USE OF FEDERAL FIGURESExcept where otherwise indicated, items of busi-ness income, gain, loss or deduction are to beentered on the return as reportable for federal taxpurposes. All items reported on Form NYC-204derived from federal partnership returns are, how-ever, subject to verification, audit and revision bythe Department of Finance. Report the character ofa partner’s share of income, gains, losses anddeductions from a partnership as if it were realizeddirectly by the partner regardless of how the part-ner acquired its partnership interest and regardlessof whether the partner’s share of such items is dis-proportionate to its interest in capital. The preced-ing sentence does not apply to guaranteed pay-ments or other payments to the partner treated asmade to one who is not a partner for federal incometax purposes, and does not affect the treatment ofany item as being derived from an unincorporatedbusiness carried on in the City by the partner.

FEDERAL OR NEW YORK STATE CHANGESIf, on audit of the partnership return, the federal orNew York State tax authorities change any item ofincome or deduction reported to the InternalRevenue Service or the New York State Departmentof Taxation and Finance, or an item of income ordeduction is changed as a result of a renegotiation ofa contract with the United States or New York State,or the partnership executes a consent and waiver of


the restrictions to assessment under IRC section6213(d) or NYS Tax Law section 681(f), the partner-ship must report the change to the Department ofFinance within 90 days. Form NYC-115 should beused for this purpose and may be obtained from thesources listed in these instructions.

Form NYC-115 must be filed separately andshould not be attached to any return.

If an amended federal or New York State return isfiled reflecting a change in distributable income orin the partner’s distributive shares, an amendedUnincorporated Business Tax return must be filedwithin 90 days. Use Form NYC-204 to file anamended return and check the box on page 1.

ACCOUNTING PERIODS AND METHODSThe accounting period for which Form NYC-204 isfiled and the method of accounting used are thesame as for federal income tax purposes. If a part-nership’s taxable year or method of accounting ischanged for federal income tax purposes, thechange must also be made for purposes of theUnincorporated Business Tax.

PENALTIESThe law imposes penalties for failure to file areturn or to pay any tax when due, or for making,rendering, signing, certifying or filing a false orfraudulent return, or for making a false certifica-tion. The mere fact that the figures reported onForm NYC-204 are taken from the federal returnwill not relieve the partnership from the imposi-tion of penalties because of negligence or for filinga false or fraudulent return.

TAX PREPARERSAnyone who prepares a return for a fee must signthe return as a paid preparer and enter his or herSocial Security Number or PTIN. Include thecompany or corporation name and EmployerIdentification Number, if applicable.

Preparer Authorization: If you want to allow theDepartment of Finance to discuss your return withthe paid preparer who signed it, you must checkthe "yes" box in the signature area of the return.This authorization applies only to the individualwhose signature appears in the "Preparer's UseOnly" section of your return. It does not apply tothe firm, if any, shown in that section. By checkingthe "Yes" box, you are authorizing the Departmentof Finance to call the preparer to answer any ques-tions that may arise during the processing of yourreturn. Also, you are authorizing the preparer to:

Give the Department any information miss-ing from your return,Call the Department for information aboutthe processing of your return or the status ofyour refund or payment(s), andRespond to certain notices that you haveshared with the preparer about matherrors, offsets, and return preparation. Thenotices will not be sent to the preparer.

You are not authorizing the preparer to receiveany refund check, bind you to anything (includingany additional tax liability), or otherwise representyou before the Department. The authorizationcannot be revoked, however, the authorization willautomatically expire no later than the due date(without regard to any extensions) for filing nextyear's return. Failure to check the box will bedeemed a denial of authority.

SPECIFIC INSTRUCTIONSIf this is an amended return, check the boxon page 1

Check the box marked "yes" on page 1 of thisform if, on your federal return: (i) you reportedbonus depreciation and/or a first year expensededuction under IRC §179 for "qualified NewYork Liberty Zone property," "qualified NewYork Liberty Zone leasehold improvements," or"qualified Resurgence Zone property," regard-less of whether you are required to file formNYC-399Z, (ii) you claimed a federal targetedjobs credit for Liberty Zone business employ-ees, or (iii) you replaced property involuntarilyconverted as a result of the attacks on theWorld Trade Center during the five (5) yearextended replacement period. You must attachFederal forms 4562, 4684, 4797 and 8884 to thisreturn. See instructions for Schedule B, lines 14d,19 and 20 for more information.

SCHEDULE AComputation of Tax

LINE 1 - BUSINESS INCOMEEnter on line 1, the total from page 2, Schedule B,line 32.

LINE 2 - BUSINESS ALLOCATIONPERCENTAGETaxpayers not allocating income should enter100% on line 2, then complete lines 4 and 5.

For tax years beginning on or after January 1, 2005,except as provided in the following sentence, taxpayersmust allocate business income using the formula method.However, taxpayers who used the books and recordsmethod for the two immediately preceding tax years,which must have consisted of 12 months each, may makea one-time election to continue using the books andrecords allocation method for each tax year beginning onand after January 1, 2005 and before January 1, 2012. Seeinstructions for Schedule E for more information.

Taxpayers allocating income for UnincorporatedBusiness Tax purposes and using the statutory for-mula basis (Schedule E) should determine the busi-ness allocation percentage to be used here by com-pleting Schedule E, Parts 1, 2 and 3. Transfer thepercentage from Schedule E, Part 3, line 5 to line 2 ofthis schedule rounded to the nearest one hundredthof a percentage point and check the “formula” box.

Eligible taxpayers electing to allocate income on thebasis of business books and records should mark“yes” on the box on the top of page 1, check the sec-ond box on line 2, omit the percentage and disregardlines 3a and 5. Enter on line 10 the sum of lines 1, 3band 9. (Refer to the instructions for Schedule E.)

Taxpayers allocating income on the basis of analternative method of allocation must completeSchedule E, Parts 1, 2 and 3 and attach an explana-tion of the alternative method. If a percentage for-mula is used other than the statutory formula,enter on line 2 of this schedule the percentageshown in the explanation rounded to the nearestone hundredth of a percentage point. If a directallocation method is used, disregard lines 2, 3aand 5. Enter on line 10 the sum of lines 9, 3b andthe amount directly allocated to New York Citycontained in the explanation. Check the appropri-ate box on line 2. (Refer to the instructions forSchedule E, Alternative Allocation Method.)

LINE 3a - INCOME, GAIN OR LOSS FROMNYC REAL PROPERTYThe business allocation percentage is not appliedto income from rentals of New York City real prop-erty or gains or losses from the sale of New YorkCity real property. Enter here the modified gain(or loss) from the sale or exchange and netincome from rental of real property located in NewYork City included on line 1 of Schedule A. This isthe gain (or loss) and net rental income includedon line 12 of Schedule B, as adjusted for the por-tion of the New York City modifications (ScheduleB, part 2) applicable to such items. If New YorkCity modifications are not applicable, enter on line3a the full amount of gain (or loss) and net rentalincome included on line 12 of Schedule B. (Referto “Who is Subject to the Tax,” paragraph 6.)

LINE 3b Taxpayers who subtracted a distributive share ofincome or gain from another partnership, otherthan a mobile telecommunication partnership, online 24 of Schedule B of this form should add backthe same percentage of such income or gain as theother partnership allocated to the City for purpos-es of determining its own business income.

Taxpayers who added back a distributive share ofbusiness loss or deductions from another partner-ship, other than a mobile telecommunication part-nership, on line 15 of Schedule B of this formshould subtract the same percentage of such lossor deductions as the other partnership allocated tothe City for purposes of determining its own busi-ness income. See instructions for lines 15 and 24.

LINE 7b Taxpayers who subtracted a distributive share ofinvestment income or gain from another partnership,other than a mobile telecommunication partnership,on line 24 of Schedule B of this form should addback the same percentage of such income or gain asthe other partnership allocated to the City for pur-poses of determining its own investment income.

Taxpayers who added back a distributive share ofinvestment loss or deductions from another partner-ship, other than a mobile telecommunication partner-ship, on line 15 of Schedule B of this form should sub-tract the same percentage of such loss or deductionsas the other partnership allocated to the City for pur-poses of determining its own partnership income.

LINE 9 - ALLOCATED INVESTMENTINCOMEOnly the amount on line 7a should be multipliedby the IAP. After determining the product of theamount on line 7a and the IAP enter the sum ofthat product and the amount on line 7b on thisline. If the investment allocation percentage iszero, interest on bank accounts must be multipliedby the business allocation percentage.

LINE 10 – TOTAL BEFORE NOLDEDUCTIONSFor taxpayers using formula allocation, enter on line10 the sum of the amount on line 9 and the amountson lines 5 and 6. For taxpayers electing to use thebooks and records method of allocating businessincome, enter on line 10 the sum of the amount online 9 and the amounts on lines 1 and 3b.

UNINCORPORATED BUSINESS NET OPER-ATING LOSSIf line 10 shows a net loss from business, this loss


is the partnership’s 2006 unincorporated businessnet operating loss that may be carried back or for-ward as provided below.

Only the first $10,000 of each year’s loss may becarried back. The carryback period for City purpos-es generally corresponds to the federal carrybackperiod available for individuals. Because a partner-ship does not carry over NOLs, it will not havemade a Federal election with regard to any netoperating loss carryover. Therefore, for City taxpurposes for losses arising in taxable years endingin or after 2002, it will be presumed that, unless thetaxpayer attaches a statement to this return indicat-ing that the taxpayer intends to carry back the first$10,000 of the current year's loss for either 2 or 5years, the taxpayer is presumed to have elected torelinquish the entire carryback period.

If the taxpayer elects to carry back the first$10,000 of the loss, any excess net operating lossmay be carried forward as if the taxpayer hadelected to relinquish the entire carryback periodfor all but the first $10,000 of the loss.

Losses that are not permitted to be carried back maybe carried forward and used to offset income for theperiod permitted for Federal Tax purposes, 20 yearsfor losses from years beginning after 8/5/97.

If a “carryback” results in an overpayment of aprior year’s tax, a claim for refund on Form NYC-113 (Claim for Credit or Refund of UnincorporatedBusiness Tax) should be filed within the limitationperiod prescribed by law. This claim should beaccompanied by a copy of Form NYC-204 filed forthe taxable year for which the refund is claimedand a detailed statement of the computation.

LINE 11 - NEW YORK CITY NETOPERATING LOSS DEDUCTIONIf the partnership had an unincorporated businessnet operating loss in a prior year any part of whichmay be carried over to 2006, the amount claimedfor 2006 should be entered on line 11 after com-pleting Schedule F, line 1. (Refer to instructions forSchedule F.)

LINE 13 - ALLOWANCE FOR ACTIVEPARTNERS’ SERVICESA deduction may be claimed for reasonable com-pensation for personal services rendered by thepartners. The allowable deduction is:

1) 20% of line 12, or2) $5,000 for each active partner,

whichever is lower. If line 12 is a loss, enter “0” online 13. This deduction is not dependent onamounts actually withdrawn by the partners assalaries and is in lieu of any deduction for salariescredited or paid to or withdrawn by them. Enterin the box provided on line 13 the number of part-ners actively engaged in the business.

LINE 15 - SPECIFIC EXEMPTIONA specific exemption of $5,000 is allowed against netincome reported on line 14. If more than one busi-ness was carried on by the partnership, only oneexemption of $5,000 is allowed against the combinednet income derived from all business activities.

The specific exemption of $5,000 must be proratedon a $13.70 daily basis if the business was carriedon for a period of less than a full taxable year of 12months, unless the business was carried on andthe returns filed for a number of whole months. Inthat case, the proration is $416.67 per month.

EXAMPLE

#1 If the partnership carried on business for afull 9 months, the exemption amount to beentered on line 15 is $3,750.03 (9 months X$416.67 per full month).

#2 If the partnership carried on business for 263days, the exemption amount to be entered online 15 is $3,603.10 (263 days X $13.70 per day).

Taxpayers filing a short period return shouldfill in the dates at the top of page 1 of thereturn and prorate the specific exemption asdescribed above.

LINE 16 - TAXABLE INCOMEIf line 16 is a loss refer to the instructions forSchedule A, line 10.

LINE 18 - SALES AND USE TAX ADDBACKThis item relates to the unincorporated businesstax credit for sales and compensating use tax paidon certain machinery, equipment and services(NYC Administrative Code Sections 11-503(d) and11-503(k)). If the taxpayer received a refund orcredit in 2006 of such sales or compensating usetax for which it claimed an unincorporated busi-ness tax credit in a prior tax period, the amount ofsuch refund or credit must be added back on line18. A corresponding adjustment is to be made online 18 of Schedule B, part 2. (Refer to instructionsfor line 18 of Schedule B, part 2.)

LINE 20- BUSINESS TAX CREDITIf the amount entered on line 19 is $3,200 orover, no credit is allowable; enter “0” on line 20.

If the amount entered on line 19 is $1,800 orless, your credit is the entire amount of taxon line 19. No tax will be due.

If the amount of tax entered on line 19 exceeds$1,800 but is less than $3,200, a credit isallowed in the amount determined by multiply-ing the tax on line 19 by a fraction, the numera-tor of which is $3,200 minus the amount of thetax on line 19 and the denominator of which is$1,400. Use the following formula:

FORMULAamount on line 19 x ($3,200 - tax on line 19 ) = business tax

$1,400 credit

EXAMPLE

If the tax on line 19 is $2,800, the business taxcredit is calculated as follows:1) $2,800 X ($3,200 - $2,800) = $800

$1,400

2) Enter $800 on line 20

3) Enter $2,000 ($2,800 - $800) on line 21(Unincorporated Business Tax).

LINE 21 - TAX BEFORE UBT PAID CREDITEnter on line 21 the Unincorporated Business Taxdue before applying the UBT paid credit. If thecredit on line 20 equals the tax shown on line 19,enter “0” on line 21.

LINE 22 - UBT PAID CREDITEnter on line 22 the credit against theUnincorporated Business Tax paid by partner-ships from which you receive a distributive shareor guaranteed payment that you include in unin-

corporated business taxable income. (AttachForm NYC-114.7, UBT Paid Credit.)

LINE 23 - UNINCORPORATED BUSINESS TAXIf the balance is less than zero, enter “0.”

LINE 24a - OTHER CREDITSEnter on line 24a credits against the unincorporat-ed business tax for:1) relocation and employment assistance pro-

gram (REAP) credit. (Refer to instructions onForm NYC-114.5.) (Attach form.)

2) sales and compensating use taxes. (Refer toinstructions on Form NYC-114.5 and instruc-tions for line 14 of this schedule.) (Attach form.)

NOTE: this credit may only be taken for sales taxpaid, if any, in the current year on eligible pur-chases in prior years.

LINE 24b - REAL ESTATE TAX ESCALATION, INDUSTRIAL BUSINESS ZONE, AND EMPLOYMENT OPPORTUNITY RELOCATION COSTS CREDITS. (Refer to instructions on Form NYC-114.6, Claim for Credit Applied to Unincorporated Business Tax.) (Attach form.)LINE 24c - LOWER MANHATTAN RELOCA-TION AND EMPLOYMENT ASSISTANCEPROGRAM (LMREAP) CREDITRefer to instructions on Form NYC-114.8 andattach form.

LINE 24d - MADE IN NYC FILM PRODUC-TION CREDITRefer to instructions on Form 114.9 and attachform.

LINE 26 - PAYMENT OF ESTIMATED TAXEnter on line 26 the sum of all payments of estimatedtax made for calendar year 2006 or fiscal year begin-ning in 2006 including any amount of overpaymentfrom the preceding taxable year credited to thisyear’s tax, and payment made with extension, NYC-64. Complete the table on page 3 of this return.

LINE 29a - LATE PAYMENT/INTERESTIf the tax is not paid on or before the due date(determined without regard to any extension oftime), interest must be paid on the amount of theunderpayment from the due date to the date paid.For information as to the applicable rate of inter-est, call Customer Assistance at (212) 504-4036.

LINE 29b - LATE PAYMENT OR LATEFILING/ADDITIONAL CHARGESa) A late filing penalty is assessed if you fail to

file this form when due, unless the failure isdue to reasonable cause. For every month orpartial month that this form is late, add to thetax (less any payments made on or before thedue date) 5%, up to a total of 25%.

b) If this form is filed more than 60 days late,the above late filing penalty cannot be lessthan the lesser of (1) $100 or (2) 100% of theamount required to be shown on the form(less any payments made by the due date orcredits claimed on the return).

c) A late payment penalty is assessed if youfail to pay the tax shown on this form by theprescribed filing date, unless the failure isdue to reasonable cause. For every month or


partial month that your payment is late, addto the tax (less any payments made) 1/2%, upto a total of 25%.

d) The total of the additional charges in a and cmay not exceed 5% for any one month exceptas provided for in b.

If you claim not to be liable for these additionalcharges, attach a statement to your return explain-ing the delay in filing, payment or both.

LINES 31 and 32 - NET OVERPAYMENTIf there is an overpayment on line 31, enter on line32a the amount of overpayment to be refunded.Enter on line 32b the amount to be credited to the2007 estimated tax on Form NYC-5UB. If line 25is less than zero, disregard negative sign and addthat amount to line 26.

LINE 33 - TOTAL REMITTANCE DUEIf the amount on line 28 is not greater than zero,enter on line 33 the sum of the amount on line 27and the amount by which line 30 exceeds line 28, ifany. After completing this return, enter the amountof your remittance on line A. This must be the fullamount as shown on line 33. All remittances mustbe payable in U.S. dollars drawn on a U.S. bank.Checks drawn on foreign banks will be rejected andreturned. Remittances must be payable to:

NYC Department of Finance.

The entire balance due must be paid with the

Enter the amount from Schedule L, Line 14, column(d) of federal Form 1065.

return and is not to be transferred to or paid onany other return.

SCHEDULE BComputation of Total Income

PART 1 - ITEMS OF BUSINESS INCOME,GAIN, LOSS OR DEDUCTIONAmounts on lines 1 through 12 are to be enteredfrom the federal Partnership Tax Return andSchedule K. Attach federal Form 1065 and allschedules, including individual Schedules K-1.

1) Where a partnership carries on two or moreunincorporated businesses, either wholly orpartly in New York City, all are treated as onebusiness for purposes of the UnincorporatedBusiness Tax. Combine the net income of allbusiness activities and enter on lines 1 through9. An unincorporated entity (not an individual)is considered to be carrying on any trade, busi-ness, profession or occupation carried on inthe City by any other unincorporated entity inwhich the taxpayer owns an interest. An unin-corporated entity will not be considered to beconducting an unincorporated business in theCity as a result of owning an interest in anotherunincorporated entity if the second entity isnot engaged in any activity in the City.

2) If business is carried on both inside and out-side New York City and the taxpayer is elect-ing to allocate business income according tothe books and records of the business, reportin Schedule B, part 1, the New York Cityincome and deductions only. Apply the NewYork City modifications described in part 2that relate to the New York City items report-ed.

If the taxpayer is using an alternative methodof allocation and a percentage formula is

used other than the statutory formula, enterthe amounts from the federal tax return onlines 1 through 11 of this schedule. If adirect allocation method is used, report inSchedule B, part 1, the New York Cityincome and deductions only. Apply the NewYork City modifications described in part 2that relate to the New York City items report-ed. (Refer to the instructions for Schedule E,Business Allocation for further details.)

NOTE : A partnership that makes an election underIRC Section 754 may not adjust the basis of its assets onthe sale or purchase of an interest in the partnership.

LINES 1, 2, 3 AND 4Enter on line 1 the ordinary income (loss) fromfederal Form 1065, line 22. Enter on line 2 netincome (loss) from all rental real estate activity notincluded on line 1, but included on Schedule K offederal Form 1065. Enter on line 3 portfolioincome included on federal Schedule K. Enter online 4 guaranteed payments to partners properlyreportable on Schedule K. If you are electing touse the books and records method of alloca-tion, enter amount allocable to New York City.

Portfolio income includes interest, dividends, roy-alties, annuity income and gain (loss) on the dispo-sition of property. (Attach a schedule indicatingtype and amount of portfolio income.)

LINE 8 - ADDBACK OF OTHER DEDUC-TIONSEnter on line 8 those deductions included in lines 1and 2 that are not allowed in computing unincorpo-rated business taxable income, other than the guar-anteed payments entered on line 4, the payments tocurrent or retired partners on line 5 and the NewYork City modifications on lines 13 through 15. Forexample, the partnership’s contributions to retire-ment plans for partners (if deducted on Form 1065,page 1) are entered on line 8. If you are electingto use the books and records method of alloca-tion, enter amount allocable to New York City.

LINE 9 - OTHER ITEMSEnter the net amount of the partners’ distributiveshares of income and deduction items not includ-ed in any other line on Form NYC-204, ScheduleB, but required to be reported separately to com-plete federal Form 1065. (Attach schedule.) If youare electing to use the books and recordsmethod of allocation, enter amount allocableto New York City.

LINE 11 - INCOME OR GAIN - SALE OREXCHANGE OF REAL PROPERTYRental income or loss from real property locatedoutside New York City and gain or loss on disposi-tion of real property located outside New YorkCity are not considered for purposes of computingthe unincorporated business tax. Therefore, toexclude this income, gain or loss, subtract on line11 the amount included on line 10 if income orgain is reported, and add this amount on line 11 ifa loss is reported. Do not exclude the rentalincome from property located in New York Cityeven if not considered an unincorporated busi-ness. (Refer to “Who is Subject to the Tax”, paragraph6)(See instructions for line 14(e).)

PART 2 - NEW YORK CITY MODIFICATIONSIt may be necessary to make certain additions to

or subtractions from the amount reported onSchedule B, part 1, line 12 to arrive at total incomefrom business to be reported on line 28. If any ofthe following items is applicable, complete part 2showing the nature and amount of each item. Ifnone of these applies, transfer the amount on line12 to line 28 of Schedule B.

If the business is carried on both inside and out-side New York City and you are electing to deter-mine New York City income from the books andrecords of the business, enter in part 2 only thoseadditions and subtractions that relate to the NewYork City items reported on lines 1 through 9 ofSchedule B, part 1.

- ADDITIONS -

LINE 13 - INCOME AND UNINCORPORATED BUSINESS TAXESEnter the amount of income and unincorporatedbusiness taxes imposed by New York City, NewYork State or any other taxing jurisdiction thatwere deducted in computing part 1, line 12.

LINE 14 - MODIFICATIONS RELATING TOITEMS OF TAX CREDIT AND DEDUCTIONLine 14a: The credit for sales tax paid on electrici-ty or electric service used in the production of cer-tain tangible property formerly allowed by Admin.Code §11-503(g) has been repealed for purchaseson or after November 1, 2000. No amount shouldbe added back with respect to this credit.

Purchases of machinery or equipment for which acredit is allowed by Admin. Code §11-503(d) wereexempted from sales tax effective December 1,1989. Purchases of services performed onmachinery or equipment used in production forwhich a credit is allowed by Admin. Code §11-503(k) were exempted from sales tax effectiveSeptember 1, 1996. Credits may be taken underthese two provisions only if the sales tax paymentwas made in the current year with respect to apurchase in a period when the applicable sales taxwas effective. In such case, the sales tax excludedor deducted for federal tax purposes should beadded back. If you are claiming a credit pursuantto §11-503(d), a Form NYC 114.5 for the year 1990or a prior year should be used. If you are claiminga credit pursuant to §11-503(k), a Form NYC 114.5for the year 2000 or a prior year should be used.

Line 14b: Taxpayers claiming the real estate tax escalation credit, employment opportunity relocation costs, or industrial business zone credits must enter the sum of the amounts shown on lines 4 and 5, respectively, of Form NYC-114.6.

Line 14c: Enter any amounts deducted incomputing part 1, line 12, for:

i) interest on money borrowed to pur-chase or carry bonds or securities,the interest on which is exempt fromthe Unincorporated Business Tax;

ii) expenses that relate to exemptincome or to property held for theproduction of exempt income; and

iii) amortization of bond premium on anybond, the interest on which consti-tutes exempt income.

Line 14d: The Federal bonus depreciation allowedfor "qualified property," as defined in IRC section


LINE 36 - TOTAL ASSETS FROM FEDERALRETURN

Enter the amount from line 1c of federal Form 1065(Gross receipts or sales less returns and allowances)

LINE 35 - GROSS RECEIPTS OR SALES FROMFEDERAL RETURN

168(k) is not allowed for Unincorporated BusinessTax purposes except for such deductions allowedwith respect to "qualified New York liberty zoneproperty", "qualified New York liberty zone lease-hold improvements" and "qualified property" placedin service in the Resurgence Zone (generally thearea in the borough of Manhattan South of HoustonStreet and North of Canal Street.) For City tax pur-poses, depreciation deductions for all other "quali-fied property" must be calculated as if the propertywas placed in service prior to September 11, 2001.For tax years beginning on or after January 1, 2004,other than for eligible farmers (for purposes of theNew York State farmers' school tax credit), theamount allowed as a deduction with respect to asport utility vehicle that is not a passenger automo-bile for purposes of section 280F(d)(5) of theInternal Revenue Code is limited to the amountallowed under section 280F of the Internal RevenueCode as if the vehicle were a passenger automobileas defined in that section. For SUVs that are quali-fied property other than qualified Resurgence Zoneproperty and other than New York Liberty Zoneproperty, the amount allowed as a deduction is cal-culated as of the date the SUV was actually placedin service and not as of September 10, 2001. On thedisposition of an SUV subject to the limitation, theamount of any gain or loss included in income mustbe adjusted to reflect the limited deductionsallowed for City purposes under this provision.Enter on Schedule B, lines 14(d) and 20 the appro-priate adjustments from form NYC-399Z. See,Finance Memorandum 02-3 (revised) "New YorkCity Tax Consequences of Certain RetroactiveFederal and New York Tax Law Changes" andFinance Memorandum 06-1 dated October 12,2006 “Application of IRC §280F Limits to SportUtility Vehicles” for more information.

The federal depreciation deduction computedunder the Accelerated Cost Recovery System(ACRS) or the Modified Accelerated CostRecovery System (MACRS) (IRC Section 168) isnot allowed for property placed in service in NewYork State in taxable years beginning beforeJanuary 1, 1985 (except recovery property subjectto the provisions of IRC Section 280-F).

ACRS and MACRS may not be allowed for proper-ty placed in service outside of New York State intaxable years beginning after 1984 and beforeJanuary 1, 1994 (except property subject to theprovisions of IRC Section 280-F). For additional information regarding depreciationdeductions for property placed in service outside of NewYork after 1984 and before 1994, see FinanceMemorandum 99-4 “Depreciation for Property Placed inService Outside New York after 1984 and Before 1994”.In place of the federal depreciation deduction, adepreciation deduction using pre-ACRS orMACRS rules (IRC Section 167) is allowed.Enter on line 14d the ACRS depreciation deduc-tion used in computing, part 1, line 12. (Refer toinstructions for line 20.) (Attach Form NYC-399and/or NYC-399Z.)Line 14e: Exempt Activities. Deductions and lossesattributable to activities not considered part of an unin-corporated business must be added back. See “Who isSubject to the Tax”. Add back losses, interest, depreci-ation and any other expenses deducted for federalincome tax purposes directly or indirectly attributableto the holding, leasing or managing of real property

(including any business conducted at the property asan incidental service to tenants) or to the income orgain therefrom, if such holding, leasing or managingof property is exempt from Unincorporated BusinessTax under NYC Administrative Code Section 11-502(d) in taxable years beginning on or after July 1,1994 or January 1, 1996, in the case of parking ser-vices rendered to tenants at a garage open to the pub-lic. (Refer to “Who is Subject to the Tax”, paragraph 6.)

Add back losses, interest or other expenses deductedfor federal income tax purposes directly or indirectlyattributable to notional principal contracts, the hold-ing, sale, disposition, assumption, offset or termina-tion of a position in property as defined in Admin.Code §11-502(c) (1) (A), or other substantially simi-lar losses from ordinary and routine trading or invest-ment activity as determined by the Commissioner,realized in connection with certain investment activi-ties to the extent such activities are consideredexempt from the Unincorporated Business Tax.Refer to “Who is Subject to the Tax”, Paragraph 5.

In the case of a taxpayer that qualifies for the partialinvestment exemption (see: “Who is Subject to theTax”, paragraph 5), add back losses, interest or otherexpenses deducted for federal income tax purposesdirectly or indirectly attributable to the sale or otherdisposition of an interest in another unincorporatedentity to the extent attributable to activities of thatentity covered by the taxpayer’s partial exemption.

LINE 15 - OTHER ADDITIONSIf you have received a distributive share of invest-ment or business loss or deductions from any part-nership, other than a mobile telecommunicationspartnership as described below, add back here anydistributive share amounts of such loss or deduc-tions included in calculating the amount on line 12of this schedule and not previously added back online 11. NOTE: A corresponding subtraction mayhave to be made on Schedule A, line 3b or 7b. Seeinstructions for those lines.

Mobile Telecommunications Partnerships. Fortax years beginning on or after August 1, 2002,partnerships that are partners in partnerships thatreceive at least eighty percent of their grossreceipts from providing mobile telecommunica-tions services should add back here any distribu-tive share of losses or deductions from any suchpartnership, including their share of separatelyreported items included in calculating the amounton line 1 of this schedule. There is no correspond-ing subtraction on Schedule A for these amounts.

Describe in a separate schedule the nature andamount of any additions, such as:1) interest income on state and local bonds held

in connection with the business (other thanon bonds of New York State and its politicalsubdivisions)

2) interest or dividend income on bonds orsecurities, held in connection with the busi-ness, of any United States authority, commis-sion or instrumentality that the laws of theUnited States exempt from federal incometax but not from state or local income taxes

3) royalty and interest payments made to relat-ed members as required by Ad. Code section11-506(f). See "Highlights of Recent Tax LawChanges for Partnerships (including limitedliability companies)."

4) any other additions required by Sections 11-506 and 11-507 of the NYC AdministrativeCode. (Attach any appropriate schedules.)

- SUBTRACTIONS -

LINE 17 - INCOME AND UNINCORPORATEDBUSINESS TAX REFUNDSEnter any refund or credit for the overpayment ofany income tax to the extent included in comput-ing part 1, line 10.

LINE 18 - SALES AND USE TAX REFUNDSOR CREDITSThis item relates to the unincorporated businesstax credit for sales and compensating use taxes paidon certain machinery, equipment and certain ser-vices. If the taxpayer received a refund or credit in2006 of any sales or use tax for which it claimed anunincorporated business tax credit in a prior taxperiod, the amount of the refund or credit must beadded to the Unincorporated Business Tax on line18 of Schedule A, and entered at Schedule B, part 2,line 18 as a subtraction modification. There is noaddback for current refunds of sales tax paid onpurchases or use of electricity or electric serviceused in the production of certain tangible propertyfor which the taxpayer took a credit in a prior peri-od under Adm. Code §11-503(g).

LINE 19 - FEDERAL EMPLOYMENT CREDITEnter the portion of wages and salaries paid orincurred for the taxable year for which a deduc-tion is not allowed pursuant to the provisions ofSection 280C of the Internal Revenue Code.(Attach federal Form 5884 or 8884 for Liberty Zonebusiness employees.)

LINE 20 - DEPRECIATION ADJUSTMENTIf a taxpayer took the additional depreciation deduc-tion on its federal return with respect to “qualifiedproperty” OTHER THAN “qualified ResurgenceZone property”, “qualified New York Liberty Zoneproperty” and “qualified New York Liberty Zoneleasehold improvements or SUVs for which anaddback was required under the instructions toLine 14(d) of this schedule, use NYC-399Z to calcu-late the amount of the deduction that may be deduct-ed for City purposes. The amount appearing in col-umn B of line 8 on Form NYC-399Z should be includ-ed on this line. See “Highlights of Recent Tax LawChanges”, Finance Memorandum 02-3 (revised) andFinance Memorandum 06-1 dated October 12,2006 “Application of IRC §280F Limits to SportUtility Vehicles” for more information.

In place of the disallowed ACRS deduction for cer-tain property, line 14d, a depreciation deductioncomputed by any method permitted under IRCSection 167 as in effect on December 31, 1980, willbe allowed. Enter on line 20 the ACRS adjustmentfrom Form NYC-399, Schedule C, line 8B. (AttachForm NYC-399.) (See instructions for line 14dand Finance Memorandum 99-4 “Depreciation forProperty Placed in Service Outside New YorkAfter 1984 and Before 1994”.

LINE 21 - EXEMPT INCOMEAttach a schedule showing nature and amount ofexempt income, such as:

1) interest income on United States obligationsincluded in computing part 1, line 12;

2) interest or dividend income on bonds or secu-rities of any United States authority, commis-


sion or instrumentality included in computingpart 1, line 12 but exempt from state or localincome taxes under United States law; or

3) interest or dividend income on bonds or securi-ties to the extent exempt from income taxunder New York laws authorizing the issuanceof these bonds or securities, but included incomputing part 1, line 12.

LINE 22 - DIVIDENDSEnter 50% of dividends other than dividends fromstocks not meeting the holding period require-ment set forth in IRC Section 246(c).

LINE 23 - EXEMPT ACTIVITIESSubtract income or gain includible in grossincome for federal income tax purposes from theholding, leasing or managing of real property(including any business conducted at the propertyas an incidental service to tenants) if such holding,leasing or managing of property is not subject toUnincorporated Business Tax under NYCAdministrative Code Section 11-502(d) (Refer to“Who is Subject to the Tax”, paragraph 6.)Subtract income or gain includible in gross incomefor federal income tax purposes, including divi-dends, interest, income attributable to securitiesloans, notional principal contracts, the holding, sale,disposition, assumption, offset or termination of aposition in property as defined in Admin. Code §11-502(2) (1) (A), or other substantially similar incomefrom ordinary and routine trading or investmentactivity as determined by the Commissioner, real-ized in connection with certain investment activitiesto the extent such activities are considered exemptfrom the Unincorporated Business Tax. (Refer to:“Who is Subject to the Tax”, paragraph 5.)

In the case of a taxpayer that qualifies for the par-tial investment exemption (see: “Who is Subject tothe Tax”, paragraph 5), subtract income or gainincludible in gross income for federal income taxpurposes realized from the sale or other disposi-tion of an interest in another unincorporated entityto the extent attributable to activities of that entitycovered by the taxpayer’s partial exemption.

LINE 24 - OTHER SUBTRACTIONSIf you have received a distributive share of businessor investment income or gains from any partner-ship, other than a utility partnership as describedbelow, subtract here any distributive share amountsof such income or gains included in calculating theamount on line 12 of this schedule and not previ-ously subtracted on line 11. NOTE: A correspond-ing addback may have to be made on Schedule A,line 3b or 7b. See instructions for those lines.

Utility Partnerships. For tax years beginning on orafter August 1, 2002, partnerships that are partnersin partnerships that are subject to tax under Ad.Code Title 11, Ch. 11 as “utilities” defined in Ad.Code section 11-1101(6) should subtract here anydistributive share of income or gains from any suchpartnership, including their share of separatelyreported items included in calculating the amounton line 1 of this schedule. There is no correspond-ing addback on Schedule A for these amounts.

Describe in a separate schedule the nature andamount of any subtractions, such as:

1) the portion of gain included in computingpart 1, line 12, from the sale or other disposi-

tion of property acquired before January 1,1966, except:a) stock in trade of the taxpayer or other

property of a kind that would be proper-ly included in his inventory if on hand atthe close of the taxable year, or propertyheld by the taxpayer primarily for sale tocustomers in the ordinary course of histrade or business; and

b) accounts or notes receivable acquired inthe ordinary course of the trade or busi-ness for services rendered or from thesale of property described in a) to theextent of the difference between:i) the amount of gain reported for

each property; andii) the amount of gain that would be

reported for each property if theadjusted basis of the property onthe date of sale or other dispositionhad been either:

A) its fair market value on January1, 1966, or on the date of itssale or disposition prior toJanuary 1, 1966, plus or minusall federal adjustments to basisfor the period after December31, 1965, or

B) the amount realized from itssale or other disposition,

whichever is lower.If a gain reported is from a sale ofproperty prior to January 1, 1966,reported on the installment method,the fair market value of the propertyon the date of the sale must be sub-stituted for its fair market value onJanuary 1, 1966. The total adjust-ment may not exceed the taxpayer’snet gain from the sale or other dis-position of all the property.

2) interest on money borrowed to purchase orcarry bonds or securities, the interest on whichis subject to the Unincorporated Business Taxbut exempt from federal income tax; ordinaryand necessary expenses paid or incurred dur-ing the taxable year in connection with incomeor property held for the production of thisincome; and amortization of bond premium forthe taxable year on any bond, the interest onwhich is subject to the UnincorporatedBusiness Tax but exempt from federal incometax, to the extent these items were not deduct-ed in computing part 1, line 12.

3) subtract income such as royalties from relatedmembers for the use of intangibles asdescribed in section 11-506(f) of theAdministrative Code. See "Highlights ofRecent Tax Law Changes for Partnerships(including limited liability companies)."

4) any other subtractions required by Sections11-506 and 11-507 (other than charitable con-tributions) of the NYC Administrative Code.(Attach any appropriate schedules.)

Do not include on line 24 any net operating losscarryover. Any unincorporated business net oper-ating loss deduction allowable in 2006 by reason ofa carryover of a net operating loss sustained by

the partnership in prior years should be reportedin Schedule F and on Schedule A.

SAFE HARBOR LEASES This applies to agreements entered into prior toJanuary 1, 1984. The NYC Administrative Code wasamended to nullify the effects of federal “SafeHarbor Leases” upon New York City unincorporat-ed business taxable income. (Refer to Sections 11-506and 11-507 of the NYC Administrative Code for details.)

LINE 28 - CHARITABLE CONTRIBUTIONSDeductions are allowed for charitable contribu-tions made by the partnership, as a tax entity sepa-rate and distinct from its partners, to the extentcontributions would be deductible by a corpora-tion for federal income tax purposes, but not inexcess of 5% of line 27. In general, contributionsdeductible by a corporation are the same as thosefor individuals, except that:1) contributions to fraternal societies, orders

and associations operating under the lodgesystem are not deductible, and

2) contributions to a trust, chest, fund or founda-tion are deductible only if they are to be usedwithin the United States or its possessions.

LINE 30 - INVESTMENT INCOMEInvestment income includes: 50% of dividends fromstocks held for investment; interest from invest-ment capital; net capital gain or loss from sales orexchanges of securities held for investment; andincome from cash if an election is made to treatcash as investment capital on line 3 of Schedule D.Do not include any capital loss that could not beused in computing federal taxable income.

In computing investment income, subtract theamount of deductions allowable in computingentire net income which are directly or indirectlyattributable to investment capital or investmentincome.

LINE 30a - DIVIDENDS FROM STOCKSHELD FOR INVESTMENTEnter dividends not excluded on line 22. Thisincludes 50% of dividends from corporations forwhich an exclusion was allowed on line 22 of thisschedule and 100% of dividends from stock notmeeting the holding period requirement set forthin Section 246(c) of the IRC.

LINE 30d - INCOME FROM CASHEnter income from cash on Schedule B, line 30donly if you have elected to treat cash as investmentcapital and have entered the amount thereof onSchedule D, line 3.

LINE 30f - DEDUCTIONS ATTRIBUTABLETO INVESTMENT CAPITALFor more information, see Statement of AuditProcedure 96-1-GCT, Noninterest ExpenseAttribution, January 29, 1996 and Statement of AuditProcedure 04-02-AU, GCT & UBT Treatment ofRepurchase Agreements and Securities Lending andBorrowing Transactions for Financial Services FirmsRegularly Engaged in Such Activities, September 24,2004, available on the Department's website atnyc.gov/finance.


LINE 31b – INVESTMENT INCOME TO BEALLOCATEDEnter on line 31b the amount from line 31a unlessthe amount on line 31a is greater than the amounton line 27, in which case, enter the amount fromline 27. If the amount on line 31a is a loss, enterzero (“0”) on line 31b of this Schedule B and online 7a of Schedule A.

SCHEDULE CPartnership InformationPartnerships must complete this schedule in orderto claim the allowance for partner’s services(Schedule A, line 13). In addition, this schedulemust be completed for partners to claim the UBTPaid Credit on their own respectiveUnincorporated Business, General Corporation orBanking Corporation Tax returns or a credit forUBT paid on their own City resident PIT return.

Enter for each partner in column 3 the sum of thatpartner’s distributive share of income, gain, lossand deductions of the partnership, and guaranteedpayments from the partnership, but only if thesum is greater than or equal to zero (i.e., thepartner’s income, gain, and guaranteed paymentsexceed the partner’s losses and deductions). Forthis purpose, a partner’s distributive share is thatpartner’s distributive share of each item of income,gain, loss, and deduction, other than guaranteedpayments made by the partnership, reflected inSchedule B, line 29, plus the amount of any guaran-teed payments to that partner from the partnership.If the sum is less than zero (i.e., the partner’slosses and deductions exceed the partner’s income,gain, and guaranteed payments), enter “0”.

Enter in column 4 each partner’s percentage shareof the total of the amounts entered in column 3.Divide the amount for the partner in column 3 bythe column 3 total. The total of the percentages incolumn 4 must add up to 100%.

SCHEDULE DInvestment AllocationComplete Schedule D if you directly own invest-ment capital.

Allocation for Partners in Other Partnerships.If an unincorporated entity (the "partner") is a part-ner in another unincorporated entity (the "partner-ship"), carrying on an unincorporated businesswholly or partly in New York City, the partnershould not include its percentage interest in theitems of investment capital of the partnerships fromwhich it receives a distributive share in Schedule D.The partner must allocate its distributive share ofthe partnership's investment income as providedbelow. See §28-07(j)(3)(i) of Title 19 of the Rules ofthe City of New York for more information.

Unless a partner is permitted or required by theCommissioner to use an alternative method, thepartner must allocate to the City its investmentincome from directly owned investment capitalbased solely by reference to its directly ownedinvestment capital without regard to its percentageinterest in the investment capital of any partnership.

Unless a partner is permitted or required by theCommissioner to use an alternative method, thepartner must separately allocate to the City thesame percentage of its distributive share of invest-ment income from a particular partnership as thatpartnership allocated to the City for purposes of

determining its own unincorporated business tax-able income for the partnership's taxable year end-ing with or within the partner's taxable year. Thepartner must report those amounts on lines 15 and24 of Schedule B and line 7b of Schedule A. Seeinstructions for those lines.

Discretionary use of other methods. TheCommissioner of Finance in his or her discretionmay permit or require the taxpayer to use anothermethod to allocate its directly owned investmentincome and its distributive share of investmentincome of another partnership if the Commissionerdetermines that the above methods do not result ina fair and equitable allocation to the City of the tax-payer's income. If a partner is permitted orrequired to use a discretionary method, detailedschedules and explanations should be attached.

Investment capital is the average value of yourinvestments in stocks, bonds, and other corporateor government securities, less liabilities, both longterm and short term, directly or indirectlyattributable to investment capital. Investment capi-tal does not include governmental stocks, bonds andother securities, the interest and dividends fromwhich are totally exempt from the UBT except suchinstruments that are disposed of during the taxableyear, producing taxable gain or loss. Investmentcapital does not include those stocks, bonds or othersecurities that are held for sale to customers in theregular course of business. Investment capital doesnot include interests in, or obligations of, partner-ships or other unincorporated entities.

To determine the value of your assets for invest-ment allocation purposes, you must include mar-ketable securities at fair market value.

The fair market value of any asset is the price(without any encumbrance, whether or not thetaxpayer is liable) at which a willing seller, notcompelled to sell, will sell and a willing purchaser,not compelled to buy, will buy. The fair marketvalue, on any date, of stocks, bonds and othersecurities regularly dealt in on an exchange or inthe over-the-counter market is the mean betweenthe highest and lowest selling prices on that date.

The value of all other property must be included atthe value shown on the taxpayer’s books andrecords in accordance with generally acceptedaccounting principles (GAAP).

ISSUER’S ALLOCATION PERCENTAGETo determine the portion of investment capital tobe allocated within the City, multiply the value ofeach stock or security during the period coveredby the return (column E) by the issuer’s allocationpercentage for that stock or security.

This percentage may be obtained from (1) tax ser-vice publications, (2) by writing to: NYCDepartment of Finance, Customer Assistance -Correspondence Unit, 59 Maiden Lane, 14thFloor, New York, NY 10038 , or (3) by calling(212) 504-4036. If the issuer was not doing busi-ness in New York City during the preceding year,the percentage is “0”.

SCHEDULE D, LINE 3 - CASHIf you have both business and investment capital,you may elect to treat cash on hand or on depositas either business or investment capital. If youwish to elect to treat cash as investment capital,

you must include it on this line. Otherwise, youwill be deemed to have elected to treat cash asbusiness capital. You may not elect to treat part ofsuch cash as business capital and part as invest-ment capital. You may not revoke your electionafter it has been made.

COMPOSITION OF PREPAYMENTSSCHEDULEEnter the payment date and the amount of all pre-payments made for this tax period. In the last col-umn enter the Transaction ID Number.

Every estimated tax payment to New York Cityhas been stamped with a twelve digit TransactionID Number (the number can be found on the faceof your cancelled check.)

Enter on line G the sum of the amounts on lines Athrough F and the amount from Form NYC-114.9,line 14.

SCHEDULE EBusiness Allocation An allocation of business income is permitted forpurposes of the Unincorporated Business Tax ifthe partnership carries on business both insideand outside New York City.Allocation for Partners in Other Partnerships.If an unincorporated entity (the "partner") is apartner in another unincorporated entity (the"partnership"), carrying on an unincorporatedbusiness wholly or partly in New York City andeither the partner or the partnership allocates aportion of its unincorporated business entire netincome outside New York City, the partner mustallocate its distributive share of the partnership'sbusiness income, if any, as provided below. Thepartner should not report its distributive share ofthat partnership's business income or any of thatpartnership's allocation factors on Schedule E.

Unless a partner is permitted or required by theCommissioner to use an alternative method, the part-ner must allocate to the City the same percentage ofits distributive share of each item of a particular part-nership's business income, gain, loss and deductionas the partnership allocated to the City for purposesof determining its own business income allocated tothe City for the partnership's taxable year endingwith or within the partner's taxable year (whetherdetermined on the basis of the partnership's booksand records or using formula allocation.) The partnermust report those amounts on lines 15 and 24 ofSchedule B and line 3b of Schedule A. See instruc-tions for those lines. See §28-07(j)(2)(i)(A) of Title 19the Rules of the City of New York.Discretionary use of other methods. TheCommissioner of Finance in his or her discretionmay permit or require a taxpayer partner to useanother method to allocate its own businessincome and its distributive share of the businessincome, gain, loss and deduction of another part-nership if the Commissioner determines that themethods provided do not result in a fair and equi-table allocation to the City of the taxpayer part-ner's income. If a partner is permitted or requiredto use a discretionary method, detailed schedulesand explanations should be attached.

ALLOCATION BY SEPARATE BOOKS ANDRECORDSFor tax years beginning on or after January 1, 2005,except as provided below, taxpayers must allocate


business income using the formula method.However, taxpayers who used the books andrecords method for the two immediately precedingtax years, which must have consisted of 12 monthseach, may make a one time election to continueusing the books and records allocation method foreach tax year beginning on and after January 1,2005 and before January 1, 2012. Taxpayers mustmake this election on a timely filed original returnfor the first tax year beginning in 2005. To makethis election, check the box marked “yes” on page1 of this return. NOTE: the election cannot bemade or, if made, will be deemed to have beenrevoked if the Department of Finance determinesthat the use of books and records did not fairlyreflect the taxpayer’s income from the City foreither of the two preceding tax years. Similarly, theelection will be deemed revoked as of the begin-ning of the tax year, if the Department of Financedetermines that the use of books and records doesnot fairly reflect the taxpayer’s income from theCity for that year. A taxpayer may revoke the elec-tion for any tax year by filing a return using anoth-er permitted allocation method. However, therevocation will not be effective if the Departmentdetermines that the other method does not fairlyreflect the taxpayer’s income from the City.Further, in the case of a partnership or other unin-corporated entity, the election will be deemedrevoked as of the beginning of the taxable yearunless one or more of the persons having a propor-tionate interest or interests of more than 50 per-cent of the total amount of such interests in the tax-payer’s unincorporated business gross income andunincorporated business deductions during thattaxable year are also persons having more than 50percent of such total proportionate interests in thetaxpayer’s last taxable year beginning beforeJanuary 1, 2005. For purposes of this rule, a trans-fer of the above interests of a deceased partner tothe estate of that partner is disregarded, but anytransfer on the part of the deceased partner’sestate is not disregarded. Once the election hasbeen revoked or is deemed revoked, the taxpayermay not use the books and records allocationmethod for any subsequent year. See section 11-508(b)(2) of the NYC Administrative Code.

Eligible taxpayers who have made the election toallocate using the books and records method mustcheck the box on page 1 and complete ScheduleC, parts 1 and 2 and attach a detailed scheduleshowing the source of each item of income andexpense as being attributable to inside and outsidethe City.

ALLOCATION BY FORMULAUnless you are electing to use the books andrecords method, income from business carried onboth inside and outside New York City must bedetermined in accordance with the statutory for-mula or an alternative method approved by theDepartment of Finance. Schedules E, Parts 1, 2and 3 must be completed for this purpose in accor-dance with the specific instructions below.

A partnership that derives more than 10% of itsgross receipts for the taxable year from publishingnewspapers or periodicals or radio or televisionbroadcasting must allocate all its income using thestatutory formula unless the Department ofFinance requires an alternative method to be usedin order to fairly and equitably reflect the partner-ship’s business income in the City.

ALTERNATIVE ALLOCATION METHODIf Schedule E, Part 3 does not fairly and equitablyreflect the income from New York City and you usean alternate method, you must still completeSchedule E, Part 3, based upon the statutory formu-la and attach a detailed explanation of the alternateallocation method used to determine New York Cityincome. Full details of any modifications increasingor decreasing the amount of New York City incomecomputed by use of the alternate method and howthe alternative method is more equitable than thestatutory formula must also be attached.

If the partnership directly carried on more than onebusiness for which an alternative allocation methodis required, a similar statement must be preparedfor each business and attached to the return.Security and commodity brokers should refer to19 RCNY Section 28-07(h) for special rules for allo-cating commissions, manager fees, primaryspreads, and selling concessions.

SCHEDULE E, PARTS 1 AND 2Enter the information requested in parts 1 and 2, allcolumns. Indicate in the “rent” column whether youown or rent the premises listed. Enter the amount ofrent paid, if any. (Attach rider if necessary.)

SCHEDULE E, PART 3Compute the business allocation percentage bymeans of the three-factor formula as follows:

the property factor (line 1)the payroll factor (line 2)the gross income factor (line 3)

Each factor is computed by dividing the amount incolumn A by the amount in column B. The result-ing percentages are added together, the sum isdivided by 3, and the resulting allocation percent-age rounded to the nearest one hundredth of a per-centage point entered on line 5. If one of the fac-tors is missing, the other two percentages areadded and the sum is divided by two. If two of thefactors are missing, the remaining percentage isthe allocation percentage. A factor is not missingmerely because its numerator is zero, but is miss-ing if both its numerator and denominator are zero.

EXAMPLEA partnership has no employees either inside oroutside New York City and pays no wages. Theallocation percentage is computed by adding theproperty percentage and the gross income percent-age and dividing the total by two.

After the business allocation percentage is com-puted, multiply Schedule A, line 4 by the businessallocation percentage to determine the amountallocated to New York City.

Double Weighting for Manufacturers.For taxable years beginning after 6/30/96, a manufac-turing business may elect to use a double-weightedgross income factor. An election must be made on atimely filed original return and is made by entering online 3b the amount from line 3a. If you make an elec-tion, add the percentages in column C and divide thesum by 4 and enter the result rounded to the nearestone hundredth of a percentage point on line 5. If oneor more of the other factors is missing, add theremaining percentage(s) and divide by the number ofpercentages so added. If you do not wish to makethe election, do not enter an amount on line 3b.For purposes of this election, a manufacturing busi-

ness is an unincorporated business primarily engagedin the manufacturing and sale of tangible personalproperty. Manufacturing includes assembly, workingraw materials into wares, and giving new shapes, qual-ities or combinations to matter that has already gonethrough some artificial process, through the use ofmachinery, tools, appliances or other similar equip-ment. An entity is primarily engaged in manufactur-ing if more than 50% of its gross receipts for the yearare attributable to manufacturing.

The three factors are described below in theinstructions for lines 1a, 1b, 1c, 2 and 3. Completelines 1a, 1b, 1c, and 1d of Schedule E to determinethe average value of real and tangible personalproperty of the business.

LINE 1a - REAL PROPERTY OWNEDEnter in column A the average value of real proper-ty located within New York City. Enter in column Bthe average value of real property connected withthe business, both inside and outside New YorkCity. For this purpose, property connected with thebusiness does not include property from which thetaxpayer solely receives rental income not consid-ered income from an unincorporated business.See: “Who is Subject to the Tax”, paragraph 6.

The average value of the property is determinedby adding:

1) its value at the beginning of the taxable year,and

2) its value at the end of the taxable year, anddividing by two.

LINE 1b - REAL PROPERTY RENTED FROM OTHERSThe value of real property rented to the businessand to be included in line 1b is eight times thegross rent payable during the taxable year forwhich the return is filed. Gross rent includes:

1) any amount payable for the use or posses-sion of real property or any part thereof,whether designated as a fixed sum of moneyor as a percentage of sales, profits or other-wise; and

2) any amount payable as additional rent or inlieu of rent, such as interest, taxes, insur-ance, repairs or any other amount requiredto be paid by the terms of a lease or otheragreement; and

3) that proportion of the cost of any improve-ment to the real property made by or onbehalf of the business which reverts to theowner or lessor upon termination of a leaseor other agreement.

If a building is erected on land leased by or onbehalf of the business, the value of the building isdetermined in the same manner as if it were ownedby the business. The value of the underlying land isdetermined by multiplying the gross annual groundrent by eight. Enter the value of rented real proper-ty located within New York City in column A andthe value of all rented real property in column B.

LINE 1c - TANGIBLE PERSONAL PROPER-TY OWNEDEnter in column A the average value of tangiblepersonal property located within New York City.Enter in column B the average value of all tangiblepersonal property connected with the business,both inside and outside New York City.


The average value of the property is determinedby adding:1) its value at the beginning of the taxable year,

and2) its value at the end of the taxable year, and

dividing the sum by two.

LINE 1d - TANGIBLE PERSONAL PROPER-TY RENTED FROM OTHERSFor tax years beginning on or after January 1,2005, rented tangible personal property must beincluded in the property factor. The value of therented tangible personal property to be included inline 1d is eight times the gross rent payable for thetangible personal property during the tax year.

LINE 2 - WAGES, SALARIES AND OTHERPERSONAL SERVICE COMPENSATIONThe amounts to be entered on line 2 includewages, salaries, and other personal service com-pensation paid only to employees of the unincorpo-rated business. Do not include payments to inde-pendent contractors or to independent salesagents. The portion that represents the amountpaid in connection with operations carried on inNew York City should be entered on line 2 in col-umn A. The total compensation paid to employeesduring the taxable year in connection with unin-corporated business operations carried on bothinside and outside New York City should beentered in column B. If an employee works in ortravels out of an office or other place of businesswithin New York City, the compensation paid tothat employee for services is part of operationscarried on within New York City and must beincluded in New York City amounts.

LINEs 3a and 3b - GROSS SALES OFMERCHANDISE OR CHARGES FOR SER-VICES DURING THE YEARExcept as provided in the following paragraphs,the amount to be entered on line 3a in column A isthe portion of the total gross sales or charges thatrepresents services performed by or through anagency in New York City. This includes servicesperformed by employees, agents, agencies or inde-pendent contractors situated at, connected with, orsent out from offices of the unincorporated busi-ness (or its agencies) located in New York City.

Notwithstanding the foregoing, for tax yearsbeginning on and after July 1, 2005, the source ofincome from services will be determined by theplace where the services were performed (the“place-of-performance method”), instead of theoffice out of which the services were performed,according to the following phase-in schedule:Taxpayers having gross receipts of less than$100,000 for the first tax year starting on or afterJuly 1, 2005 and before July 1, 2006, must use theplace-of-performance method starting in that year.Taxpayers having gross receipts of less than$300,000 for the first tax year starting on or afterJuly 1, 2006 and before July 1, 2007, must use theplace-of-performance method starting in that year.All other taxpayers must use the place-of-perfor-mance method starting with the first tax yearbeginning on or after July 1, 2007.

For taxable years beginning after June 30, 1996,the amount to be entered on line 3, column A withrespect to sales of tangible personal property isthe portion of the total gross sales of tangible per-

sonal property that represents sales where ship-ment is made to a point within New York City.

The amount to be entered on line 3a in column Bis the total gross sales made or charges for ser-vices performed by the partners or by employees,agents, agencies, or independent contractors ofthe unincorporated business inside and outsideNew York City.

Do not include royalty income from related mem-bers that was subtracted on line 24 of Schedule B.See "Highlights of Recent Tax Law Changes forPartnerships (including limited liability companies)."

Partnerships engaged in publishing newspapers orperiodicals must allocate receipts from advertisingin such publications based on the circulation of thepublication in the City compared to the total circu-lation. Partnerships engaged in radio or televisionbroadcasting, whether by cable or other means,must allocate receipts from broadcasting pro-grams or commercial messages based upon thelocation of the audience for the broadcasts in theCity compared to the total audience. Partnershipsengaged in publishing newspapers or periodicalsor in radio or television broadcasting must allocatereceipts from subscriptions to such newspapers,periodicals and broadcast programs based on thelocation of the subscriber.

Manufacturers electing to double-weight the grossincome factor should enter the amount from line3a, Column C, on line 3b. See Title 19 Rules of theCity of New York §28-07(d) for rules relating tothe definition of manufacturing.

Receipts from management, administration or dis-tribution services provided to a regulated invest-ment company (RIC) must be allocated basedupon the percentage of the RIC's shareholdersdomiciled in New York City. (Attach rider show-ing computation.) See Admin. Code §11-508(e-2).

SCHEDULE FNet Operating Loss Deduction

The net operating loss deduction allowable onForm NYC-204 is computed in the same mannerfor unincorporated business tax purposes as itwould be for federal income tax purposes if theunincorporated business were an individual tax-payer, but taking into account only unincorporatedbusiness gross income and unincorporated busi-ness deductions allocated to New York City of theunincorporated business.

If the unincorporated business was carried onboth inside and outside New York City during theyear in which the net operating loss was sustained,the allowable 2006 net operating loss deduction isdetermined by reference to the allocation basis ormethod used in the year the loss was sustained,regardless of whether the unincorporated busi-ness was carried on both inside and outside NewYork City during 2006. The amount of loss allocat-ed to New York City for the loss year is theamount to be entered on line 1 of Schedule F.

LINES 2, 3, 4 and 5For purposes of completing lines 2 through 5, theamount of loss absorbed in a year is determinedwithout regard to changes in interests of the mem-ber partners.

LINE 7 If the amount on Schedule A, line 10 is a loss,enter "0."

If you are submitting a Schedule F for more thanone loss year, enter on line 7 of Schedule F for theearliest loss year the amount from the currentyear's Schedule A, line 10. On the Schedule F forany subsequent loss year, enter on line 7 theamount from the current year's Schedule A, line10, reduced by the sum of the amounts entered onSchedules F, line 12 for any earlier loss years.

For limitations on the net operating loss deductionof a partnership where the interests of the mem-ber partners have changed between a loss yearand the year for which the deduction is claimed,refer to Section 11-507(2)(b) of the NYCAdministrative Code and 19 RCNY Section 28-06(c)(3).

LINE 12 Multiply the percentage on line 11 by the amounton line 8. The excess, if any, of the amount on line8 over the amount entered on line 12 is consideredabsorbed and is not available as a carryover toanother year.

SCHEDULE GAdditional Required InformationAll questions in this schedule (questions 1through 11) must be answered.

CUSTOMER ASSISTANCEFor interest calculations and account information,contact Customer Assistance, Monday throughFriday, 8:30am to 5:30 pm.

Call: (212) 504-4036

You can speak to a Customer AssistanceRepresentative between the hours of 9:00 am and4:30 pm.

You can also visit our Internet website at the fol-lowing address:

nyc.gov/finance

PRIVACY ACT NOTIFICATIONThe Federal Privacy Act of 1974, as amended, requires agenciesrequesting Social Security Numbers to inform individuals fromwhom they seek this information as to whether compliance with therequest is voluntary or mandatory, why the request is being madeand how the information will be used. The disclosure of SocialSecurity Numbers for taxpayers is mandatory and is required by sec-tion 11-102.1 of the Administrative Code of the City of New York.Such numbers disclosed on any report or return are requested fortax administration purposes and will be used to facilitate the process-ing of tax returns and to establish and maintain a uniform system foridentifying taxpayers who are or may be subject to taxes adminis-tered and collected by the Department of Finance, and, as may berequired by law, or when the taxpayer gives written authorization tothe Department of Finance for another department, person, agencyor entity to have access (limited or otherwise) to the informationcontained in his or her return.

NYC-204 Instructions 2006Revised 02/27/2007


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Documents

Instructions for Form NYC-204deducted in computing federal taxable income. Where the related member is a New York City taxpayer, the related member(s) must subtract from ENI those